Rhino started as a record shop on Westwood Boulevard, Los Angeles, in 1973, run by Richard Foos, and became a record distributor five years later[3] thanks to the effort of then-store manager
Harold Bronson. Their early releases were mostly novelty records (such as their first single, in 1975, Wild Man Fischer's "Go To Rhino Records"). The difficulties involved in getting airplay and distribution for such material eventually caused Foos and Bronson to take the label in other directions. One of Rhino's early artists was The Twisters, whose Los Angeles popularity far exceeded their album sales.[citation needed] Rhino's mail-order catalogs and early LP labels featured the company's mascot character, a cartoon Elvis Presley rhinoceros wearing a black leather jacket named "Rocky", designed by bootleg cover artist William Stout, and later cartoonist Scott Shaw!.

Some of the label's earliest successes with reissues were achieved by acquiring the rights to the White Whale Records catalog[citation needed] that included the Turtles. By the mid-1980s, most of Rhino's releases were reissues of previously released recordings licensed from other companies. For superior sound quality, audio mastering of the original tapes (where possible) was done under the direction of Bill Inglot, and the label's creative packaging made Rhino one of the most respected reissue record labels, receiving rave reviews from music collectors, fans, and historians[citation needed]; and later, Grammy nominations and awards.[citation needed] Rhino was quick to get into the compact disc market, releasing dozens of oldies CDs at the dawn of the CD age in 1984.[citation needed] Their retrospective compact disc releases, such as those in the Billboard Top Hits series, are often remastered to restore or improve upon the releases' original analog audio quality.

Through the 1980s and 1990s, the company's a&r head, Gary Stewart, signed artists who recorded new music including Cindy Lee Berryhill, Steve Wynn, Rank and File, Gene Clark & Carla Olson, The Textones, NRBQ. These albums were released on the main Rhino label and on subsidiary labels such as RNA (Rhino New Artists) and Forward. However, the company's artists tended to generate more critical acclaim than public interest; for the most part, sales totals in the low five figures or less were routine for Rhino-produced albums,[citation needed] and the less costly, less risky reissue business remained the company’s primary revenue stream. One exception was the success of "At This Moment" by Billy Vera & the Beaters, a 1981 song that went to the top of the U.S. Billboard charts in late 1986 after being featured in an episode of the hit NBC TV series Family Ties.

In 1985,[4] Rhino signed a six-year distribution agreement with Capitol Records. During 1989 Rhino and Capitol’s parent EMI made a deal to jointly acquire Roulette Records; Rhino received the US rights to Roulette's catalog, excluding jazz. When the distribution deal with Capitol ended in 1992, Rhino signed a new distribution deal with Atlantic Records, and in turn Time Warner bought a 50 per cent stake in the record company. In 1998, Time Warner bought the other half of Rhino; making the company a wholly owned unit of Time Warner.[5] The Rhino Records retail store, which was part of the 50% sale in 1992 but which reverted to Foos after Time Warner bought out the remainder,[6] closed in 2005.[7][8][9]

In 1999, Rhino started the 'Rhino Handmade' division of limited-edition releases available primarily from their website. All Handmade deluxe editions were limited to about 3,000 copies or less, and once sold out were not re-pressed. (Since Rhino revamped its website in early 2013, the Handmade division appears to have been discontinued.)

In 2003, co-founders and longtime executives Richard Foos and Harold Bronson left Rhino, reportedly due to frustration with the challenges of an increasingly competitive market. In fact, Time Warner's final vesting of its 100 percent ownership of the label, and its subsequent 'reorganization' of label staff, which did not stop at the former owners, were the major factors in their exits.[citation needed] Soon after, Foos inaugurated a new label, Shout! Factory, which began releasing dozens of CDs and videos mirroring the original early-1990s Rhino philosophy.
In 2004, Time Warner spun off its music divisions and today Rhino is part of the newly organized Warner Music Group.

In addition to dealing with archive material, the label also manages the U.S. distribution or worldwide production of compilations for more recent Warner acts, including still-active artists such as Enya, New Order, and Chicago.